Jul 29, 2014

Valero Not Named in Letter Requesting Collusion Probe

Maintenance closures, operational issues and other interruptions in the supply of gas from west coast refineries have gas prices soaring in the west, one researcher charges.

Valero Not Named in Letter Requesting Collusion Probe

Do local oil refineries play a major part in high west coast gasoline prices?

With gas prices at west coast pumps higher than those elsewhere in the country, some in the federal government are asking if recent refinery closures on the west coast are the result of a coordinated effort by the companies. One congressperson has called for an investigation into the charges, though the companies deny that such collusion exists. 

Valero, the San Antonio, Texas based refining company that owns the Benicia Valero Refinery is not one of the companies accused of collusion in a report by energy analyst McCullough Research of Portland, OR.

Gas prices are an average of $3.45 per gallon in Michigan, $3.35 in Florida, $3.35 in Texas, and $3.65 in New York City. In Benicia, gas prices are over $4 per gallon. 

Sen. Maria Cantwell, D.Wash, has asked the Federal Trade Commission to investigate Shell, Tesoro, Conoco-Phillips, Alon, Chevron and BP for possible collusion into raising the price of gas, according to a story by McClatchy News Service. Refinery spokespeople say prices are the result of market demand, and not collusion. 

While Valero Refining wasn't named as one of the companies Cantwell wants investigated, Cantwell's charges still raise ire with Valero.

Chris Howe of the Benicia Valero refinery said, "I haven't read the McCullough Research report referred to in the McClatchy article, but I know that there have been many investigations into why prices in a particular area went up - some of them called for by Sen. Cantwell - and none has ever shown any kind of collusion or market manipulation. This one won't either, because there is no market manipulation, except by the politicians and regulators who have made it very expensive to manufacture fuel on the West Coast. When the investigation inevitably finds no wrongdoing, that finding won't get the same kind of media attention that calls for investigations always do. Keep in mind that this is an election year, and Sen. Cantwell is looking to get some publicity."

The Benicia Valero refinery went through a planned shutdown recently.  During the shutdown the refinery was able to finish a sulphur scrubber and other elements of the Valero Improvement Project which cost the company over $1 billion.

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